This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
You might have a lot of paperwork to get in order by Tax Day, or maybe you just tend to procrastinate. Whatever the case, if you need more time, it is possible to ask for a six-month extension to file your federal tax return.
Filing for an extension does not mean you have more time to pay the taxes you owe. The government still wants that money by the regular due date, and you will incur interest and likely a penalty if the payment is late.
Here’s what you need to know to file a tax extension.
What Is a Tax Extension?
A tax extension extends the deadline for filing your federal tax return by six months. All you have to do to get an extension is request one by April 18, 2023 (since April 15 falls on a Saturday, and Emancipation Day is April 17).
Again, note that a tax extension does not give you extra time to pay any taxes owed. If you can’t afford to pay your full tax bill, it’s a good idea to pay as much as you can by Tax Day and then apply for an individual payment plan on IRS.gov or call the IRS at 800-829-1040 to discuss payment options.
The agency may waive the late-payment penalty in a few cases, but it will not waive interest charges on unpaid tax bills. The interest rate is the federal short-term rate plus 3 percentage points. In early 2023, for individuals, the rate was 7%, compounded daily.
The late-payment penalty, aka failure-to-pay penalty (you filed for an extension on time but still owe taxes), is much less severe than the failure-to-file penalty (you didn’t file your tax return by the due date and did not request an extension).
Either way, a penalty plus interest on taxes owed past the deadline might be a grand incentive for many taxpayers to try to cough up most of their bill on time.
Recommended: Visit the Tax Season Help Center
How Do Tax Extensions Work?
There are three ways to request an automatic extension of time to file your return:
1. File IRS Form 4868 electronically using your personal computer or through a tax professional who uses e-file. You’ll be asked to provide your prior year’s adjusted gross income for verification purposes. (If you do not know your prior year’s AGI and do not have a copy of that tax return, you can find the information by signing in to your IRS online account.)
2. Mail a paper Form 4868. (The IRS says, though, not to mail in Form 4868 if you file electronically unless you’re making a payment with a check or money order.)
3. Pay all or part of your estimated income tax due, and indicate that the payment is for an extension, using Direct Pay or the Electronic Federal Tax Payment System. You can also pay taxes with a credit card or debit card.
Special rules about filing extensions may apply to those serving in a combat zone or a qualified hazardous duty area or living outside the United States.
Reasons to File for a Tax Extension
Many high earners routinely seek tax extensions because their business dealings and investments can take longer to sort out.
Other people might seek a tax extension for different reasons, such as:
• Needing extra time to track down missing tax documents, especially if you’re dealing with an extenuating circumstance (for instance, the closure of a place of employment shortly before tax documents were due to be issued).
• A major unplanned life event interrupts your plans and makes it hard to get things together on time.
• You’re still figuring out how to do taxes as a freelancer and want to take all the deductions you can.
• You’re going to take the home office tax deduction as a self-employed person and want to carefully crunch the numbers because you’re skipping the simplified deduction of up to $1,500.
• General life busyness led to the deadline sneaking up on you.
• Maybe you’re filing taxes for the first time and you simply procrastinated.
• You have a primary and second home and are still unsure whether to itemize and take the mortgage interest deduction.
Filing for a Tax Extension Online
Remember, you don’t need to file Form 4868 if you make a payment using IRS electronic payment options or by phone and indicate that you want an extension.
If you do need to file Form 4868, you can do so electronically by accessing IRS e-file with your tax software or by using a tax professional who uses e-file.
IRS e-file options include Free File, which lets you prepare and file your federal income tax online using guided tax preparation at an IRS partner site (for filers with AGI of $73,000 or less) or Free File fillable forms (for any income level).
Filing for a Tax Extension by Mail
You can simply download and print Form 4868 from IRS.gov, fill it out, and mail it in, along with a check for estimated income taxes owed.
The form itself includes information about where to send the document, depending on where you live.
Recommended: Steps to Prepare for Tax Season
Can I File for a Tax Extension If I Owe Money?
Yes, you can still file for a tax return extension if you owe the government money — but the money itself is still due on the original due date.
Unfortunately, there’s no way to file for an extension of taxes owed. Rather, your best bet is to pay as much of your estimated taxes as you can when you file for the extension, and then apply for a payment plan online or call the IRS to learn about your options for complete repayment.
Can Someone Be Denied a Tax Extension?
Yes, but it’s uncommon. If your tax extension was denied, it was probably because of a mistake in your personal information on Form 4868.
Just resubmit your request and make sure to enter your current address, name, and Social Security number correctly.
How to Know If You Owe Taxes
While self-employed individuals must estimate their taxes and pay on a quarterly basis, those who file using W-2 wage reports may not do this kind of taxation math.
The good news is, there are several easy ways to find out if you owe Uncle Sam. You may receive a notice in the mail from the IRS, but ensure that it’s official correspondence and not a note from a scammer. The IRS will never email, text, or reach out to individuals via social media.
“Your Online Account” on IRS.gov allows you to see how much you owe in taxes. This user profile also allows you to pay any owed taxes directly.
Finally, you can always call the IRS at 800-829-1040 to confirm any amount of back taxes you might owe.
Is it hard to file a tax extension? Not really. What may prove difficult is paying all taxes owed by the filing deadline, or paying a balance still owed plus a penalty and interest after the April date to file taxes.
Here are some general tips to help.
3 Money Tips
- If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.
- If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.
- An emergency fund or rainy day fund is an important financial safety net. Aim to have at least three to six months’ worth of basic living expenses saved in case you get a major unexpected bill or lose income.
How do I know if I’ve been approved for a tax extension?
Extension requests are rarely denied, but news of a denial would come by email. In the event of an error in an address or name, a taxpayer will be given a few days to remedy the error and file a tax extension again.
You can get an automatic extension of time to file your tax return by filing Form 4868 electronically. You’ll receive an electronic acknowledgment of your request.
If you mail in Form 4868, you probably will not get verification of receipt of your request. You could (endure the hold time and) call the IRS at 800-829-1040 to confirm that your request was received.
Is there a fee to file for a tax extension?
No. It’s free.
Is the process for filing a tax extension easy?
Yes. You simply submit Form 4868 electronically or on paper by the filing deadline, or make a tax payment through approved methods and indicate you want an extension of time to file your federal return.
What happens if I file my taxes late and without an extension?
If you don’t pay your tax balance by the filing deadline and you did not file for an extension, you’ll get hit with a failure-to-file penalty (in most cases) and interest. The failure-to-file penalty is usually 5% of the tax owed for each month or part of a month that your return is late, up to 25% of the total owed.
Interest compounds daily on any unpaid tax from the due date of the return until the date of payment in full.
Let’s say you file for an extension but can’t pay all of your tax bill. The “failure to pay” penalty is much less severe than the failure-to-file penalty. Interest is still charged daily.
If you’re expecting a tax refund, you won’t face a penalty for filing late. You just won’t get the refund until you file.
Photo credit: iStock/Delmaine Donson
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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.